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Bankers show appetite for megadeals
Investment bankers were disappointed by the lack of mergers and acquisitions in the first half of the year. However, a surge of large deals in Asia as well as renewed optimism on U.S. stock markets may be setting the stage for megadeals. Dealmakers report that market uncertainties stemming primarily from U.S. president Donald Trump's tariff war, high interest rate and broader geopolitical conflicts hampered, but not derail, what bankers had expected to be a record-breaking year for global M&A. Dealmakers say that Trump's tariffs, which were launched by his "Liberation Day," on April 2, sent a chill through the market and forced several deals and initial publicly-traded offerings to subsequent quarters. The expectation was that we would see lots of deal activity during the first half 2025. In reality, we did not see it," said Tommy Rueger. UBS, ranked by Dealogic as the No. According to preliminary data, from January 1 until June 27, UBS ranked No. 9 in equity markets revenue. More than a dozen interviews with top bankers indicate a growing confidence that market turmoil is behind us. Dealmakers report that the S&P 500 index and Nasdaq index have recently closed at record highs, which has renewed optimism about the strength of M&A activity in the second half. Ivan Farman said that many deals were put on hold and will return, according to Ivan Farman. He is the co-head of global M&A for Bank of America. In Dealogic's year-to-date rankings, Bank of America was ranked No. Dealogic's ranking for the year to date includes M&A at No. 5. "I'm confident about the second half." Dealmakers are optimistic, citing the market recovery and Trump's relaxed antitrust policies as reasons for optimism. John Collins, global head of Mergers & Acquisitions for Morgan Stanley (ranked No. 1), said that the probability of large transactions has increased compared to a year earlier. Morgan Stanley was ranked No.4 in total fee revenue for investment banks, and No.3 for M&A deals. M&A deals ranked No. From January 1 to June 27, there were 2,14 trillion dollars in transactions, up 26% compared to the same period last. A large part of the increase came from Asia where activity nearly doubled, to $583.9billion. According to preliminary Dealogic data, the deal activity in North America increased by 17% between January 1 and June 27 to $1.04 trillion. The VIX index measures market volatility and has fallen to levels where investors are more confident about investing today. It's clear that momentum is continuing to build and paving the path for larger transactions. People are more optimistic than they were one month ago, and have started to implement their plans," said Philip Ross. In the calmer markets, institutional investors have started to return to equities. More companies are also moving forward with IPOs that were delayed earlier in this quarter. Rueger explained that the combination of these factors has led to a strong new issue background over the past three to four week. Saadi SOUDAVAR, head of equity markets at Deutsche Bank for Europe, Middle East, and Africa, said: "Equity market volatility has been largely absorbed by the markets, despite tariffs and geopolitical issues." MORALE BOOSTERS Several big deals helped boost the market's morale during the peak of tariff turmoil. Global Payments, for example, acquired a firm that provides card processing and account management services in April for $24,25 billion. Charter Communications agreed in May to purchase privately-held rival Cox Communications, for $21.9 billion. Chart Industries, a U.S. equipment manufacturer, and Flowserve Corp. agreed to merge. The combined company is valued at approximately $19 billion. According to Dealogic, 17,528 transactions were signed in the first half of the year compared to 20,583 during the same period the previous year. The deals this year were larger, which pushed the value of all deals up. The data show that the number of deals worth $10 billion or more has increased by 62% compared to the same period in 2013. Dealmaking was strong in Asia. M&A activity in the first half of this year increased to $583,9 billion from $269.9 a year earlier. The region, led by Japan and China accounted for 27,3% of global M&A, an increase of more than 11 points from the same time last year. The Asia-Pacific region was home to some of the largest deals in the region. Toyota Motor announced on June 3, plans to privatize one of its suppliers for $33 billion. On June 16, Abu Dhabi National Oil Company's (ADNOC), a consortium headed by ADNOC, announced an all-cash $18,7 billion takeover of Australia’s second largest oil producer Santos. Asia helped to drive global equity issuance up despite market volatility. The overall volume rose nearly 8%, reaching $350 billion compared with the same period in the previous year. "There will be more Asia-to Asia activity," said Raghav Malieh, global vice-chairman of investment banking, Goldman Sachs. The firm was ranked no. "You will see more Asia-to-Asia activity," said Raghav Maliah, global vice chairman of investment banking at Goldman Sachs. The firm was ranked No. M&A revenue is No. "Japan is a major driver of all deal volumes in Asia and we believe this trend will continue."
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Copper prices slip on mixed Chinese data and tariff uncertainty
The copper price fell on Monday as investors digested mixed data from China, the world's largest metals consumer. They also took into account progress made in trade negotiations between Canada and United States. The price of three-month copper at the London Metal Exchange fell 0.3% to $9,848 per metric tonne by 0920 GMT after reaching its highest level in three months last Friday. "We're consolidating the gains we made last week, which was a good week for financial markets. We were very pro-risk," said Dan Smith of Commodity Market Analytics. China's manufacturing activity contracted for the third consecutive month in June. However, it did so at a slightly slower rate than previous months. This indicates that stimulus measures are starting to take effect. Smith stated that the economy in the United States is showing signs of being robust. The Shanghai Futures Exchange's most-traded copper contract increased 0.2%, to 79.870 yuan (11,150.36 dollars) per ton. The financial markets received a boost when Canada abolished its digital service tax to help advance the stalled US-Canada trade negotiations. This gave investors hope for more trade agreements to be reached, reducing uncertainty over tariffs imposed on the U.S. by President Donald Trump. The metals market also benefited from the weaker dollar, as the dollar index remained close to its three-year-low hit last week. The dollar is weaker, making commodities priced in U.S. dollars less expensive for buyers who use other currencies. U.S. Comex Copper Futures dropped 0.5% to $5.10 per lb. This brings the premium of Comex to LME copper down to $1,391 per ton. Other metals include LME aluminium, which rose 0.1% per ton to $2.598.50, and LME lead, which gained 0.2%, to $2.048.50. Zinc fell by 0.4%, to $2.767. Tin dropped 0.1%, to $33,725. Nickel was unchanged at $15,245. Click here to see the latest news in metals.
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Sona Comstar, an Indian company, plans to produce magnets domestically in India and reduce imports from China
Sona Comstar plans to manufacture locally the crucial components used in electric cars, taking advantage of a government initiative to encourage their production in India as China limits their exports. As a response to U.S. Tariffs, China, which makes around 90% of all rare earth magnets in the world, imposed restrictions on exports of these products. The U.S. signed an agreement with China this month that would speed up the approval of rare earth exports. However, companies and governments around the world are scrambling for alternative solutions. India, with the third largest car market in the world and the fifth largest reserves of rare Earths, has launched a new incentive program to encourage magnet production at home to reduce dependence on China. Sona Comstar in Gurgaon, also known as Sona BLW Precision Forgings is the first Indian company to announce its plans to manufacture magnets at home after the government program was made public. We are the biggest importers of rare earth magnets in the country. Vivek Vikram, CEO of Sona Comstar, said in an interview that they are working closely with the government to ensure India is self-sufficient on magnets. In the last financial period, the company that supplies motors and gears to car manufacturers such as Tesla and Stellantis imported 120 metric tons of magnets from China. Singh said that the company would consider the Indian incentives, once they were finalised, as well as other factors to determine the investment it will make in local manufacturing. He claimed that the company had the money to invest in local manufacturing. The five-fold growth of revenue, from $400 million to more than $500 million, over the last five years was cited as evidence. Plans to mine and process the rare earths will take many years to develop. This means that reducing dependence on China is not an immediate solution. Sona Comstar had planned to import 200 tons of magnets to meet the needs of its electric vehicle customers, which account for about a third its revenue. Sona Comstar generates about 40% of its revenue in the U.S., followed by India and Europe. The company's revenue will be dominated by India this year after it acquired the Indian Railways business from Escorts. Sona Comstar wants to expand its customer base in China, Japan, and South Korea. Plans for growth are a response to the sudden death of Sona Comstar chairman Sunjay Kapur in June, which caused the shares to fall due fears about the future direction of the company. Jeffrey Mark Overly was appointed as the company's new chairman. Singh said that this would not affect the company's direction as the team is led by professionals and the firm has the "management bench strength" necessary to deal with crises and disruptions. Aditi Sharma, Aditi Anantharaman and Muralikumar Aantharaman contributed to this report.
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Police: At least 8 dead in fire at Sigachi Plant in India's Telangana State
Police said that at least eight people were killed and over 26 injured in a fire Monday caused by an explosion inside a unit of the pharmaceutical company Sigachi Industries, located in India's Telangana State. V. Satyanarayana is the Inspector General for the Hyderabad Region. He said that four people were in "extremely serious condition" and 10 others are still trapped inside the plant. Satyanarayana stated that there is still fire and a flame near the area of the reactor where the accident appears to have started. Sigachi Industries has not responded to any requests for comment. The local media reported, citing the news agency PTI earlier that day, that the explosion had killed at least 10 individuals. The shares of the pharmaceutical company fell by more than 13 percent to their lowest level in a single month. They were also on track for their worst day ever since mid-March, 2024. Sigachi provides services to a variety of industries including pharmaceuticals, food, cosmetics and chemicals.
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Fashion brands slow down on green promises
Few fashion brands invest to reduce emissions from the supply chain Suppliers struggle with low-carbon technology Brands want to share the costs of production, not just loans Tahmid Zami Tahmid Zami Researchers, companies, and industry insiders claim that there hasn't been much done to move this forward in the supply chains of major textile producing countries such as Bangladesh, India, and Cambodia. Todd Paglia is the executive director of Stand.earth in North America, a non-profit environmental advocacy group. About a third (32 brands) of 42 brands that were surveyed for a Stand.earth Report in 2025 will have reduced their emissions by 10 percent compared to baseline years, while 40 brands will see their emissions increase. The study found that only a small fraction of major brands provide funding to reduce emissions in their supply chain, which puts financial pressure on factories and other suppliers who lack the financial power to switch to cleaner processes. Fashion Revolution, an organization that campaigns for sustainable fashion, released a report in 2024 stating that about half of major fashion brands around the world have set scientifically-based emission reduction targets. While many brands are still not making visible efforts to fund their climate plans or support suppliers in decarbonising, others have made some. "What we see is a dangerous disconnection," said MohiuddinRubel, former director of Bangladesh’s garment manufacturers' associations and now director at Denim Expert Ltd. The FINANCING Gap By switching to energy-efficient equipment, using renewable energy sources and using low-emission transportation, apparel manufacturers can reduce emissions at the factory level. A report by the consulting firm FSG stated that in Bangladesh, the garment industry hub, 83% emissions come from the burning of fossil fuels on site, such as natural gas to generate electricity or to run boilers for heat and steam. According to a report by the Apparel impact Institute (AII), an organization that promotes sustainable investments, many suppliers are reluctant to make the large capital investment required to replace gas-based heating systems with energy-efficient technology, such as heat pumps. AII says that Bangladeshi fashion manufacturers face a $4.8 billion investment gap to reduce emissions by half between 2030 and 2020. Clothing manufacturers in India and Vietnam face similar challenges to reduce their dependence on fossil fuels for heat and steam production, which is used in the washing, dyeing and finishing of fabrics. According to Bangladeshi supplier Rubel, about half of the brands that Stand.earth surveyed offered some kind of support. However, most of this involved audits and assessments of carbon footprints or small-scale projects. He said: "This is just a drop of water and doesn't address the industry-wide, systemic transformation that is required." Abhishek Bhasal, the head of sustainability for Arvind Limited, an Indian textile supplier, says that brands should also offer long-term agreements with suppliers and premium prices to encourage them to invest in cleaner manufacturing. BRAND ACTION Stand.earth's report stated that only six brands had reported offering project financing to suppliers for their decarbonisation efforts. H&M is one of them, a Swedish retail giant that has helped 23 smaller suppliers invest in low carbon tech. Kim Hellstrom is the senior sustainability manager for H&M. She said that brands need to accept there will be costs associated with climate change. The retailer plans to test energy efficient thermal technologies in China, India, and Vietnam. Hellstrom said, "The low carbon technology is already here. You don't have to talk about innovations - you just need to test them out first in this industry." Kristina Liljas is the senior director for sustainable finance and engagement of AII. She said that if brands backed their goals with budgets, they would be able to establish better relationships with suppliers.
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Dalian Iron Ore records first monthly increase in four months on strong near-term demand
Dalian iron ore contracts edged up on Monday. This was their first rise in four month due to a strong near-term Chinese demand. However, the protracted property crisis held back gains. The day-traded price of the most traded September iron ore contract at China's Dalian Commodity Exchange was 0.21% higher, ending at 715.5 Yuan ($99.88). The contract increased by 2.06% in June. As of 0746 GMT the benchmark July Iron Ore traded on Singapore Exchange fell 0.16%, to $94.4 per ton. This is a drop of 1.3% for this month. According to data from Mysteel, hot metal production, which is a measure of iron ore consumption, was stable at 2.42 million tonnes as of 27th June. Mysteel reported that the average rate of blast furnace capacity utilization rose by 0.04 percentage points, to 90.83%, in the period from June 20 to 26. The non-manufacturing PMI, which includes construction and services, grew from 50.3 up to 50.5. The manufacturing sector in China contracted for the third consecutive month in June. However, it did so at a slightly slower pace. Analysts said that a combination of weak domestic demand and a long-lasting property crisis has led to factory owners holding onto inventory while they wait for Beijing to ease tensions in trade with the U.S. Investors priced in possible interest rate cuts as Federal Reserve Chair Jerome Powell indicated in his testimony in which he said that if inflation was kept in check, despite tariffs, then cuts would be likely. The reports that Donald Trump had asked Powell to resign also added pressure. Dollar-denominated investments are cheaper for holders of currencies other than the greenback. Coking coal and coke, which are used to make steel, also fell, by 1.08% and 0.466% respectively. The benchmarks for steel on the Shanghai Futures Exchange have largely increased. Rebar gained 0.23%. Hot-rolled coils rose 0.13%. Stainless steel gained 0.16%. Wire rod fell 0.09%. ($1 = 7.1638 Chinese yuan). (Reporting and editing by Lucas Liew, Sumana Liew, Eileen Soreng).
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Gold gains on dollar weakness, US jobs data awaited
Gold rose on Monday, as the dollar remained near its lowest point in over three years. Meanwhile, the focus of the market shifted to the upcoming U.S. employment data that could influence the Federal Reserve’s rate-cut trajectory. Gold spot rose 0.7% at $815 GMT after falling to its lowest level since May 29. Bullion prices have risen by 5.4% this quarter. U.S. Gold Futures rose 0.6% to $3,305.50. The U.S. Dollar index is hovering near its lowest point since March 2022. The greenback price of bullion is less expensive to other currency holders when the dollar weakens. I see two interrelated factors that support gold. "A weaker U.S. Dollar and President (Donald Trump)'s continued pressure on the U.S. Federal Reserve, to reduce interest rates," Giovanni Staunovo said. Trump said that he wouldn't appoint someone to lead the Federal Reserve if they didn't support lower interest rates. Investors were waiting for the U.S. employment data, due Wednesday, as well as the non-farm payrolls, due Thursday. These reports could give insight into the Fed’s future interest rate cut plans. Staunovo said, "The focus will remain if data indicate a further decline in economic activity that would allow the U.S. Central Bank to lower interest rates." Investors expect a 65 basis point Fed rate cut by the end this year. In a low interest rate environment, gold tends to be more appealing as it has no yield. Canada has scrapped the digital services tax that targeted U.S. tech firms, late Sunday night, just hours before the tax was to go into effect. This is part of a move to progress the stalled U.S.-Canada trade negotiations. Silver spot rose 0.5%, to $36.16 an ounce. Platinum was up 1.9% at $1,364.72, and palladium gained 1.5%, to $1150.30. (Reporting and editing by Bernadettebaum in Bengaluru)
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HEDGE FLOW - Goldman Sachs says that hedge funds are selling energy stocks when oil prices fall.
Goldman Sachs' note from Monday shows that hedge funds sold energy shares at the highest rate since September 2024, and the second fastest in the past 10 years. Oil prices were falling on the back of easing Middle East tensions. Crude oil prices dropped over $10 following the cease-fire agreement between Israel and Iran. On Friday, oil prices shook on news of an increased supply of crude from the oil-producing group OPEC+. They remain below their recent high of $81. Goldman's note stated that hedge funds began selling energy-related stocks in every major region on June 23. Goldman's note sent to clients Friday said that the sales in the sector last week were the largest in nearly a year, and the second biggest in the past decade. The sale of shares in oil, gas, and consumable oil firms as well as energy equipment manufacturers and service providers was conducted. The note said that hedge fund sales were concentrated in every region, but especially North America and Europe. Goldman said that hedge funds in Europe increased their short positions while reducing long bets. A short position anticipates that asset prices will fall, whereas a long position anticipates an increase. The data showed that while many speculators increased their short positions against energy companies, the total combined position of speculators remained proportionally long on global energy shares. Goldman Sachs said that hedge fund gross leverage - a measure of how many hedge funds are involved - is at its highest level in five years. The bank added that hedge funds bought company shares in all global regions, and last week was the biggest stock-buying in five weeks. It said that the most popular stock sectors were financial, technology and industrial companies. Reporting by Nell Mackenzie, Editing by Dhara Raasinghe and Joe Bavier
Russell: Coal was Australia's top commodity exporter, but gold will soon be the king.
Iron ore has surpassed coal as the top commodity exported by Australia. This is due to the increase in shipments to China of steel raw materials.
Gold is now threatening to surpass coal.
According to the latest quarterly report of Australia's government commodity forecaster, earnings from precious metal exports are expected to increase to A$56 Billion ($36.6 Billion) in the fiscal period starting July 1.
The Department of Industry, Science and Resources released data on Monday that showed this figure was higher than the A$39bn forecast for metallurgical and thermal coal.
The combined export earnings of A$67billion for 2025-26 are still higher than those for gold.
Here's where things get interesting.
It's possible that by 2026-27, gold will surpass the combined total of metallurgical and thermal coal used for steel production.
The government anticipates that gold exports will increase to 313 tons by 2026-2027, from 289 tons during 2025-2026 and 250 tonnes in 2024-2025.
It would be a major coup for Australia to become the world's largest net gold exporter and third-largest gold producer.
The department is cautious about its gold price forecast, expecting that it will fall to $2.825 per ounce in 2026-27 from $3.200 in 2025-26. This is below the current spot rate of $3.273.
Most analysts expect a price of $2.825 on average for 2026-2027, but the government forecaster has a history of being conservative.
Gold could continue to rise 29% since Donald Trump was elected president of the United States for a second time in November. Trump has implemented and is planning a number of policies that are considered bullish for gold.
Tax and spending policies would increase the fiscal deficit of the federal government, placing pressure on U.S. Treasuries to be a store value.
The sweeping tax cut and spending bill proposed is edging closer to being passed by the Republican-controlled Senate and House of Representatives, and if successfully signed into law it is estimated by the non-partisan Congressional Budget Office that it would add $3.3 trillion to U.S. debt over a decade.
Trump's tariff and trade policies are also uncertain, as his July 1 deadline for the United States to make deals with dozens major trading partners is looming.
Even if Trump announces lower tariffs in April than he did, imports to the United States are likely to face higher taxes under Trump's second term than during his first term and when Joe Biden was president.
The gold price is likely to rise as investors continue to look for alternatives to U.S. Treasuries, and other assets. Central banks and investors alike are expected to keep buying.
Price Assumptions
The current Australian dollar to U.S. dollar exchange rate would result in export revenues of A$61.6billion if a higher price of gold is assumed in 2026-2027, of $4,000 per ounce.
The price forecasts may be overly optimistic, given the dynamics of the seaborne coal market.
According to the government's forecast, metallurgical coke will average $201 per ton by 2026-2027. Thermal coal benchmark at Newcastle Port is expected to be $110 per ton.
The Singapore Exchange closed its metallurgical coal contract at $178.50 per ton of coal on June 27. GlobalCOAL valued Newcastle thermal coal at $108,87 during the week ending June 27. Both prices are close to recent 4-year lows.
The government expects the price of both types coal to rise slightly in the coming years. This would require that seaborne demand on major Asian markets like China, India and Japan, as well as South Korea, at least remain stable, if it does not improve.
China and India are the world's two biggest coal importers and producers. They want to increase domestic production and reduce imports. This may restrict their seaborne imports.
Japan and South Korea want to use cleaner fuels, such as liquefied gas. This may end up costing less than coal due to the flood of capacity that is expected to enter the market in 2027.
It is possible that Australia will become the second largest commodity exporter in 2026/27 if gold continues its current upward trend and seaborne coal remains under pressure.
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These are the views of a columnist, who is also an author.
(source: Reuters)